Tags: Talbott | next | crisis | worse

Author Talbott: ‘Next Crisis Could be Even Worse Than the Last One’

Monday, 25 Jun 2012 11:30 AM

By Dan Weil and John Bachman

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Burgeoning government debt loads around the world could send the global financial system into an even deeper crisis than that of 2008-09, says investment author John Talbott.

“The last crisis was caused by about $3.3 trillion of sub-prime mortgage debt,” he tells Newsmax.TV in an exclusive interview.

“But, having said that, the sovereign debt of the world is $30 trillion, or 10 times as much. . . . This is why I say that the next crisis could be even worse than the last one.”

Story continues below video.



Countries should be getting their fiscal houses in order by shedding debt, Talbott says. “But that’s not happening, because the banks don’t want to take a loss” on their government bond holdings, he says. “If they take a loss, it will bankrupt the banks. And so we struggle along.”

First Greece and Portugal came under attack from financial markets. Now it’s Spain and Italy. And ultimately it will be Germany, France, and the United States, says Talbott, author of the new book “Survival Investing – How to Prosper Amid Thieving Banks And Corrupt Governments.”

Note: To order ‘Survival Investing' at a great price — Click Here Now.

In the United States, federal government debt totals about 100 percent of GDP, he notes. “We have tens of trillions of dollars of liability in Medicare and Social Security that no one’s even talking about. And we’re running deficits of $1 trillion a year.”

The Federal Reserve’s answer is to print money. And that means huge inflation, which will hurt investor returns, says Talbott, who has a web site, stopthelying.com.

All this means financial securities can’t be trusted, he says. So investors should turn to hard assets instead.

“Let’s get into houses, which are trading at all-time low prices,” Talbott says.

“For larger investors, let’s get into apartment buildings, condominium purchases, office buildings, and even gold -- the things that do well with inflation and where we don’t depend on corrupt middlemen to supposedly help us, advise us on our portfolio.”

Investors should devote 15 to 25 percent of their portfolio to gold, Talbott says. The precious metal overshot in its jump to a record high of $1,924 last September, but will ultimately rebound, he says.

“What you have to realize is it’s not the gold that’s going up in value. Gold really has no productive purpose. . . It’s really just a value in that it’s a stable currency, and you can’t mine a lot of it.”

With central banks around the world printing money like mad, “we’re looking for something we can do that can sustain wealth,” Talbott says. “Gold has done that very well over a very long period of time.”

In a sign of gold’s steady value, its price has been about the same as 15 barrels of oil since the 1960s, when gold traded at $30 an ounce and oil at $2 a barrel, Talbott says.

Gold could drop as low as $1,200, but it also can rise as high as $10,000, he maintains.

Note: To order ‘Survival Investing' at a great price — Click Here Now.




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